Emerging Market Investments

Markets obsessed over geopolitics and artificial intelligence last year, but the best performing stock markets didn’t come from safe-havens or the tech-heavy benchmarks. The “unexpected winners” came from frontier and small emerging markets, including each of the five best performing stock markets globally: Argentina (+114% in USD terms), Kenya (+79%), Pakistan (+79%), Sri Lanka (+70%), and Tanzania (+33%).   Why? The asset class has continued to offer diversification via uncorrelated returns, trading at historically low valuations, with lower volatility than mainstream emerging markets. Looking ahead, our key themes in 2025 for the overlooked frontier and small emerging markets are: -𝗥𝗲𝗳𝗼𝗿𝗺, 𝗥𝗲𝗰𝗼𝘃𝗲𝗿𝘆, & 𝗥𝗲𝘀𝘂𝗿𝗴𝗲𝗻𝗰𝗲 - Bold reforms are accelerating economic growth -𝗘𝘀𝗰𝗮𝗽𝗶𝗻𝗴 𝗖𝗵𝗶𝗻𝗮 & 𝘁𝗵𝗲 𝗧𝗮𝗿𝗶𝗳𝗳 𝗧𝗿𝗮𝗽 – Most of these economies (ex-Vietnam) aren’t in the crosshairs of tariffs and have low China exposure -𝗦𝘂𝗽𝗲𝗿𝗽𝗼𝘄𝗲𝗿𝘀 𝗖𝗹𝗮𝘀𝗵, 𝗠𝗶𝗱𝗱𝗹𝗲 𝗣𝗼𝘄𝗲𝗿𝘀 𝗥𝗶𝘀𝗲 – These countries are leveraging superpower rivalries to secure foreign capital for industrial expansion -𝗗𝗲𝗺𝗼𝗴𝗿𝗮𝗽𝗵𝗶𝗰𝘀 𝗗𝗲𝗳𝘆𝗶𝗻𝗴 𝘁𝗵𝗲 𝗚𝗿𝗲𝘆 𝗪𝗮𝘃𝗲 – Aging workforces plague most of the world, yet these countries are adding 130 million+ to their workforces over the next decade -𝗛𝗼𝗺𝗲𝗴𝗿𝗼𝘄𝗻 𝗛𝗲𝗿𝗼𝗲𝘀 – Local consumer brands outpacing global giants, growing faster and commanding higher market share https://lnkd.in/eurfh9BV

I am very happy to share insights from my recent op-ed in the Financial Times. Emerging markets have often been viewed as risky, but new data from the Global Emerging Markets Risk Database Consortium paints a different picture. With comparable default rates and superior recovery rates, investing in emerging markets offers resilience and potential. The statistics, spanning 30 years of lending, show that the risks in emerging markets compare favorably with other asset classes. Additionally, the portfolio diversification they offer proves beneficial during global stress periods. As a co-founder and major contributor to GEMs, IFC is committed to providing crucial data to help investors make informed decisions about emerging markets. Reallocating just 1% of global assets each year could significantly impact growth and development in these countries. Read more: http://wrld.bg/PWRb50Ro0tq The World Bank IFC - International Finance Corporation

Impact investing in emerging markets is full of opportunity—but most investors get it wrong. They assume capital alone will drive scale. They mistake mission for a business model. They expect VC-style hypergrowth in markets that don’t operate on those timelines. The result? Billions lost in misaligned investments. But the best investors? They take a different approach. 3 Investment Strategies That Win 1️⃣ Founder-First Capital Investment success isn’t about finding the right idea—it’s about backing the right operator. Markets shift, conditions change, and execution is everything. 📊 80% of successful impact investments prioritize founder resilience over just business models. (GIIN Report) 2️⃣ Scalability-Driven Investing An impact-driven business without a clear path to scale is just a local initiative with a short shelf life. The best investors fund businesses that can expand beyond their first market—or they don’t fund them at all. 3️⃣ Ecosystem Investing Capital alone doesn’t build industries. The best investors engineer access—to supply chains, regulatory inroads, talent pipelines, and strategic partnerships. The highest returns don’t come from funding companies—they come from shaping industries. 2 Strategies That Fail ❌ Mission-First, Revenue-Later Investing A great mission doesn’t pay salaries, fuel expansion, or create resilience. If impact isn’t tied to a scalable revenue model, it’s not an investment—it’s a grant in disguise. 📊 Over 60% of impact startups that fail cite a lack of sustainable revenue as the primary reason. (Stanford Social Innovation Review) ❌ Short-Term, High-Expectation Investing Emerging markets don’t operate on a Silicon Valley timeline. Investors expecting hypergrowth without accounting for market complexities end up making premature exits or forcing founders into unsustainable scaling. Key Takeaway here: The difference between real impact and wasted capital isn’t just the business model—it’s the investment strategy behind it. 📌 What’s the biggest mistake you see in emerging markets? Let’s discuss. ♻️ Share this with someone who deserves to hear it.  👉 Follow Ben Botes for more insights on Leadership, Scale-ups and Impact Investment.

Market sizing at the early stages of a startup is a rough estimate at best and a lot of excel gymnastics 🤸🏻 In emerging markets it is flat out misleading - After interviewing close to 100 operators and investors on The Enthusiast, I came to the conclusion that we should look at market sizing from a different angle, otherwise we won't get to their true potential. 1️⃣ You cannot simply use macro stats for your addressable market assumptions - significant segments of the population might not be digitised yet or out of reach; Either you underestimate greatly or hit the ball out of the park - 🇵🇰 has a huge 200M young population, but GDP / capita levels are still low, 🇨🇱 might look like a small market with 20M population, but if you take GDP / capita into account it has the same market potential as 🇨🇴 which has double the population - Tourist investors in emerging markets tend to just look at big gross TAMs without double clicking on the details, that is why they just gravitate to the big geos. 2️⃣ Building in emerging markets is about market creation, you expand your market as you grow. Mercado Libre grew slower than developed market proxies for many years, their market just wasn't ready yet, but they are able to grow 30% YoY consistently for the last 20 years and counting, riding the wave of consumer adoption and digitization 🏄♂️ 3️⃣ Building in emerging markets for the long-term is about compounding and building the infrastructure at the same time. Your potential to get to higher margins and greater customer lock-in by pursuing an ecosystem play is the ultimate game, look no further than Kavak.com or Hellas Direct 🏗️ 4️⃣ You underestimate the potential of market penetration. In more developed markets you might only be able to capture 10% of the market, but in emerging markets it is possible to get to almost market domination, just look at Kaspi.kz 5️⃣ You forget about the growth of their economies - Vietnam's 🇻🇳 GDP / capita is expected to double in the next decade - Tyme has realized this early on - you have to ride the growth rate of your markets 📈 Investing and backing founders in emerging markets means betting on the long-term. It is about market creation not disruption and expanding the pie as you go!

Fundraising in 2025: Tough Terrain, But Global Green Shoots Are Emerging 🌱 Despite hopes for a rebound, the fundraising landscape in 2025 remains tough — and I’m living it. According to SVB H1 2025 GFB Outlook Report, we’re still navigating a weak #exit market, persistent #macroeconomic headwinds, and fierce competition for #LP dollars. Yet, there are some green shoots — and they’re coming from #internationalLPs seeking stability in the US market. 📊 Key Takeaways: - 87% of US-based #PE funds now include at least one foreign LP — a record high as global investors look to US funds as safe havens amid uncertainty. - #HNW investors are cautiously re-entering the market. New funds in 2024 brought in 34 HNW LPs, up from 30 in 2023 — a 15% uptick - #VCfunds are seeing renewed interest from #Asia, #Mexico, and the - #MiddleEast, regions that previously concentrated on more established markets. - LP Preferences for Early-Stage VC Funds: #Foundations / #Endowments: 79% still prioritize early-stage VC. #Pensions: 62% are looking to back emerging managers in early-stage VC. #Investment Firms: 59% are open to early-stage VC funds, indicating a notable appetite for higher-risk, higher-reward assets. - #WesternEurope remains the dominant source of foreign LP capital, but the Middle East is rapidly emerging as a key funding hub, especially in #tech and #infrastructure. 💼 What This Means for #DiverseFounders in #EmergingMarkets: The spotlight is shifting, and the time to act is now. With 71% of LPs expressing renewed interest in early-stage VC last year, diverse-led startups in LATAM, Oceania, and Africa have a rare opportunity to position themselves as compelling investment options this year. 🌐 At Manos Capital, we’re aiming to champion founders who are not just building businesses but shaping resilient, scalable solutions in regions where innovation often arises out of necessity. For LPs seeking both diversification and #impact, these #emerging markets are fertile ground for strong returns and lasting change. 📢 For more insights, check out the full report: https://lnkd.in/gwFu_nyb #VentureCapital #ImpactInvesting #DiverseFounders #EmergingMarkets #Fundraising #GlobalCapital #HNWInvestors

One of the biggest challenges I’ve seen in emerging markets is that promising projects often never move beyond the idea stage. Too many opportunities remain stuck in the 'initiation phase', constrained by underdeveloped concepts, technical gaps, unclear project sponsorship, and institutional misalignment. Poor coordination between government agencies, the private sector, and development partners further compounds the challenge. The result? A limited pipeline of bankable projects—and stalled investments. In my experience leading blended finance initiatives and structuring investment transactions, I’ve seen that effective upstream engagement is essential. Mobilizing private capital at scale depends on early identification of market constraints and the timely development of projects—well before they reach the stage of commercial structuring. What does that look like? ▪️Project development support – Fund prefeasibility studies, transaction design, and structuring advisory. ▪️De-risking solutions – Use blended concessional finance, guarantees, and risk-sharing tools to crowd in private capital. ▪️Regulatory and policy reform – Unlock sector constraints and enable market entry through coordinated upstream engagement. ▪️Standardized instruments – Implement model PPAs, PPP frameworks, and legal templates to streamline execution. ▪️Institutional capacity building – Strengthen local developers, municipalities, public agencies, and other intermediaries to structure investable deals. ▪️Data-driven diagnostics – Use CPSDs, MASPs, and pipeline mapping to prioritize high-impact sectors and geographies. No pipeline, no private capital. No upstream preparation, no pipeline. DFIs, financial institutions, and private investors are ready. They just need something worth saying “yes” to.

Emerging markets are full of opportunities, but investing in the wrong business model can be a costly mistake. A startup that thrives in Silicon Valley may struggle in Lagos or Jakarta if it doesn’t account for local realities. The Danger of Imported Ideas Investors often make the mistake of backing companies that copy Western business models without adaptation. What works in developed markets may not work where: • Consumer behavior is different – Payment preferences, trust levels, and purchasing power vary widely. • Infrastructure is limited – Logistics, supply chains, and connectivity often require custom solutions. • Regulations are unique – Local governments may have vastly different policies compared to Western markets. What Savvy Investors Look For The best investment opportunities solve real, local problems using market-specific solutions. Some standout examples include: • FinTech built around mobile money – In regions where traditional banking is weak, mobile payments thrive. • Logistics tailored to infrastructure – Companies optimizing delivery networks for unreliable roads and supply chains. • Affordable healthcare innovations – Solutions designed to work in markets with limited medical access. The key question for investors: Is this a real business solving an actual problem, or just an imported idea? If a company isn’t designed for the local market, it won’t scale. #EmergingMarkets #InvestmentStrategy #MarketFit #BusinessGrowth #PatternCognition

Based on a recent study by S&P Global, emerging markets will play a crucial role in shaping the global economy, contributing about 65% of global economic growth by 2035. While being present in well-established markets across the world is rewarding, it is equally important for businesses to invest in emerging markets, as they offer significant growth potential thanks to a rapid economic development, a rising middle class, and an evolving consumer behaviour influenced by a huge use of digital solutions. To succeed, businesses should tailer their operations, services, or products to match with local consumer habits. Affordability is crucial, as many consumers in emerging markets have lower purchasing power, so offering cost-effective solutions can help businesses reach a wider audience. Forming local partnerships can also provide valuable market insights, easing entry and building long-term trust. While emerging markets offer plenty of opportunities, risks such as currency fluctuations, and regulatory changes must be carefully and proactively managed. By staying proactive and investing in local expertise, businesses can successfully navigate these challenges and focus on the growth potential of emerging markets. #CEO #Leadership #business #Emergingmarkets #BFLGroup

Where do we expect capital to be allocated in the next five years? While we can't predict the future, we now have great data on where impact investors are planning allocations. Impact investors are turning their attention to emerging markets, with sub-Saharan Africa (53%), Southeast Asia (49%) and Latin America (46%) among the top five markets where we expect to see the largest increases in allocations over the next five years. According to GIIN research, these regions represent a critical frontier for impact investing, particularly in sectors like energy, agriculture and infrastructure, where there is both a high demand for capital and a significant potential for transformational change. This trend speaks to the growing recognition of the immense opportunity for impact where investment capital can address critical social and environmental needs while delivering competitive financial returns. As we continue to see impact investing scale globally, learn more about how more capital is flowing into emerging markets in the State of the Market 2024 report: https://lnkd.in/eCDSh8Q3 #ImpactInvesting #GIINresearch2024 #GlobalImpact #SDGs

Excited to publish our newest Global Data Center Hub newsletter today. This week, we're diving into: - Why the next wave of data center value may come from markets most investors haven't fully evaluated - How competitive dynamics in established markets are creating new investment patterns - Strategic approaches to emerging market entry that go beyond traditional risk models - Partnership frameworks that create differential advantage in high-growth regions While established markets grapple with power constraints and increasing competitive pressures, forward-thinking investors are developing specialized frameworks for emerging market success. Here's what's at stake: Let's say you're developing data center capacity in an emerging market. You apply conventional Western models without adaptation and encounter unexpected regulatory hurdles, infrastructure gaps, and operational challenges. Your project timeline extends by years, and capital efficiency suffers dramatically. Alternatively, you implement purpose-built strategies with local partnerships, multilateral institution support, and phased development approaches. You establish market presence before competitive intensity reaches Western levels and potentially create sustainable advantages difficult for followers to replicate. The opportunity framework is clear: when investment strategies align with regional competitive dynamics, operators may position themselves for both financial returns and influence in economies representing significant future growth. What's your emerging market strategy? Read the full article to learn more. #datacenters